India's digital payments landscape reached a new high in December 2025, fueled by the increasing adoption of UPI (Unified Payments Interface) and FASTag, and further boosted by the Goods and Services Tax (GST) rate cuts implemented earlier in the year. This surge indicates a significant shift towards a cashless economy, driven by enhanced consumer confidence and the convenience of digital platforms.
UPI and FASTag spearheaded this growth, achieving unprecedented transaction volumes and values in December. UPI processed 21.63 billion transactions, reaching a value of Rs 27.97 lakh crore, marking the highest ever recorded in a single month. This surpassed the previous peak in October, which saw transactions worth Rs 27.28 lakh crore. FASTag also experienced growth, although signs of saturation were observed on an annual basis. On average, Indians executed close to 698 million UPI payments daily, with the daily transaction value rising to Rs 90,217 crore. The continuous rise in UPI transactions highlights its increasing integration into everyday economic activities.
While UPI and FASTag thrived, credit and debit card transactions experienced a slight downturn. Card spending decreased by 15-20% compared to the peak in September. Experts suggest this decline is linked to the timing of major e-commerce sales events, which typically occur earlier in the autumn season. The rising popularity of UPI is also gradually encroaching on the market share traditionally held by card payments. While IMPS (Immediate Payment Service) remains the preferred choice for high-value transfers, UPI has become the dominant platform for low-value, everyday retail transactions.
The GST rate reductions implemented earlier in 2025 played a crucial role in boosting consumer spending and, consequently, digital payments. The revised GST rates, which placed most goods under the reduced slabs of 5% and 18%, spurred big-ticket purchases. The impact of these cuts became fully integrated into the market by late September, leading to a notable shift in spending habits. Digital payments surged to ₹11 trillion on the first day of the new GST rates, with RTGS commanding the largest share at around ₹8.2 trillion. UPI transactions also saw a sharp increase, reaching around ₹82,477 crore.
Year-on-year data reveals a substantial increase in digital payments, with December 2025 figures approximately 10% higher than those from December 2024. This growth aligns closely with the national nominal GDP increase of 9%. Over the entire year, UPI transaction volumes surged from 172.2 billion in 2024 to 228.3 billion in 2025, while transaction value expanded from Rs 246.8 lakh crore to Rs 299.7 lakh crore.
One significant trend observed in December was the continued decline in average transaction size, settling at around Rs 1,293. This reflects UPI's increasing dominance in small, routine payments, such as local transport, food orders, and pharmacy purchases. Person-to-merchant (P2M) transactions continued to outpace person-to-person (P2P) payments, reinforcing UPI's role as the backbone of retail commerce. P2M transactions grew 35% year-on-year.
In conclusion, India's digital payments ecosystem witnessed remarkable growth in December 2025, driven by the widespread adoption of UPI and FASTag, and further catalyzed by the GST rate cuts. This surge reflects a growing preference for digital payment methods among consumers and businesses, contributing to the ongoing transformation of India's financial landscape.
